Q2 Market Report – Key Takeaways for Hawaiʻi Island Buyers and Sellers

If you are on the “subscription list” for the monthly newsletter containing my blog posts for that month, you also receive from me our quarterly Hawaiʻi Life Market Reports. Because I serve clients in the Kona and Kohala Coast resorts as well as everything from first time buyers to large ranch and equestrian properties, I opt for the version that includes additional statistics for the luxury market (price points above $3 million). Bottom line for the luxury and ultra luxury market is that activity there remains strong. I also here this from colleagues in luxury markets across the United States, in both urban and vacation/second home destinations.

For those of my readers who are not subscribers (or in case you missed it), here are my key takeaways from the 2024 Q2 Market Report for Hawaiʻi Island – with a focus on the West side since the Hilo/Puna market is just so different.

Resort Properties like beachfront Kolea at Waikoloa Beach Resort are still in demand with second home and investment buyers in search of licensed vacation rental properties

Hawaiʻ Island Real Estate Market 2024 – Second Quarter – Overall Takeaways

Statistics in these market reports are great because they are 20/20 hindsight. I also particularly like complementing near term fluctuations (e.g. year on year) with graphs that look at trends over long periods of time. Because you should never have too much confidence in forecasts any economist or real estate professional makes (I can say that as a licensed real estate broker who happens to have a Ph.D. in economics). For example, if you read my blog posts from 2019-ish, I was a bit bullish, expecting that after a decade-long expansion we were due for a cyclical downturn – while being mystified that in resort markets prices had still not recovered to their previous peak even without adjusting for inflation. And then the pandemic hit and was followed with a buying frenzy that sucked up all the backlog of inventory and more.

I know you have already heard this story. But hereʻs the thing. The 10-year trend line shows support for current price levels. Thatʻs my first overall takeaway from the 2Q Hawaiʻi Life Market Report, and seems to be true for all market segments.

©Hawai‘i Life | Hawai‘i Island Real Estate Market Report, Q2 2024 Year-to-Date

The second takeaway that applies generally, meaning to both sellers and buyers of Big Island real estate, is that simple rules like “below six months inventory = a sellerʻs market” are not particularly meaningful in the current market. There are multiple factors affecting buyer and seller behavior which are reflected in the nuance of the conclusions in the report. In particular the report concludes:

• Buyers and sellers seem to be at a bit of a standoff in Q2 but we expect both will start to adjust
  to the current market.
• Buyers and Sellers Are Both Likely to Make Concessions in Order to Close Deals Going Into Q3.

In other words, buyers will need to be more flexible and so will sellers. Honestly, this is already happening wherever deals are being done. Specifics below for each side.

Hawaiʻ Island Real Estate Market 2024 – Second Quarter – Seller Takeaways

Even before having this report in hand, here is the advice I have been giving to sellers based upon my own observation and anecdotal evidence:

• Buyers have a preference for move-in ready homes that already meet their needs and want list. Some of that is driven by the issues around permitting and availability of contractors and building supplies, something that I have written about already this month.
• Buyers are looking carefully at comparable sales in preparing their offer prices, and even their “want to tour” lists. Aggressively priced listings (sellers holding out for prices above where like properties have sold) are staying on market well above the averages in this report.
•  Buyers are beginning to get over their earlier resistance to more historically normal interest rates, but the affordability factor puts downward pressure on price levels at those price points and market areas where buyers typically finance.
• Starting in mid-August, buyers will need to sign representation agreements before real estate agents can show them property. This may decrease the number of showings in the short term as buyers adjust to this practice (unless they come from a state where it is already the norm), but will also help in making sure those showings are to serious buyers.

Hawaiʻ Island Real Estate Market 2024 – Second Quarter – Buyer Takeaways

Nothing in the report changed any of the advice I have been giving prospective buyers either:

• My crystal ball is broken but the exceptionally low levels of inventory and continued high levels of demand argue that waiting for prices to return to pre-pandemic levels is probably. not a smart strategy.
• If you need or want a property you can rent short term when you are not in residence, please work with an agent and company (like Hawaiʻi Life) tracking the state and county legislation and registration requirements for short term rentals. This is a market segment in flux. There ARE options where the future of rentals seems secure. But the trend in Hawaiʻi and other desirable destinations around the globe is to have stricter rules around vacation rental properties, and that is not likely to reverse.
• As the report says: Based on buyer price sensitivity we anticipate motivated sellers in some markets to accept price decreases moving into Q3. But some markets is not all markets, and there will continue to be strong competition for move-in ready homes in desirable locations at all price levels, even multiple offer scenarios.

I am already curious as to what the second half of this unusual year will bring. Again, if you arenʻt getting the monthly summary of my articles and would like to, please let me know that you would like to subscribe.